Capella breaks; Ford, General Motors down on sales numbers; Tropicana slides; West talk emerges

By Sara Rosenberg

New York, March 3 - Capella Healthcare's credit facility hit the secondary market on Monday, with the first-lien term loan B trading above its original issue discount price, and Ford Motor Co. and General Motors Corp. both saw their term loans weaken after the release of February sales figures.

Also in trading, Tropicana Entertainment LLC's opco term loan was lower on rumors that the court found the company to be in default under its bonds, which the company later refuted.

In other news, West Corp. came out with price talk on its term loan as the deal is getting ready to launch to investors on Wednesday.

Capella Healthcare allocated its credit facility on Monday morning and then proceeded to free the deal up for trading, with the first-lien term loan B quoted higher than the discount price at which it was sold, according to a trader.

The first-lien term loan B broke at 93¼ bid, 94 offered, and then traded all the way up to 94 bid, 95 offered, where it closed out the day, the trader said.

The $312 million seven-year first-lien term loan B (B1/BB-) is priced at Libor plus 350 basis points, with a 3.25% Libor floor for life. The paper was sold to investors at an original issue discount of 93. It also carries 101 soft call protection for one year.

Capella's $535 million credit facility also includes a $45 million six-year revolver (B1/BB-) and a $178 million eight-year second-lien term loan (Caa1/CCC+).

The revolver is priced at Libor plus 350 bps, with a 3.25% Libor floor for life. Revolver pricing will be based on a leverage grid.

The second-lien term loan is priced at 13% and was sold to investors at an original issue discount of 99. This tranche is non-callable for one-and-a-half years, then at 104, 102 and 101.

Citigroup, Bank of America and GE Capital acted as the lead banks on the deal, with Citi the left lead.

Proceeds were used to help fund the acquisition of nine general acute care hospitals from Community Health Systems Inc. for $315 million. The transaction includes hospitals in Alabama, Arkansas, Missouri, Oregon and Tennessee with trailing revenue of about $425 million. Combined, the nine new hospitals have 1,070 beds and employ nearly 4,000 people.

Capella is a Franklin, Tenn., for-profit hospital company.

Ford, GM drop on monthly results

Ford and General Motors's term loans headed lower during market hours after the companies announced February sales numbers, according to traders.

Ford's term loan was quoted at 84¾ bid, 85¼ offered, down from 85 bid, 86 offered on Friday, traders said.

And, General Motors's term loan was quoted at 87 bid, 88 offered, down from 87½ bid, 88½ offered, traders continued.

Ford, a Dearborn, Mich.-based automaker, reported total sales of 196,681 for the month of February, down 7% compared to the same period last year.

Ford said that in the second quarter, it plans to produce 730,000 vehicles, 10% lower than last year's production number of 811,000 vehicles, due to the current economic conditions. In the first quarter 2008, Ford expects to produce 685,000 vehicles, unchanged from the previously announced plan.

As for General Motors, the Detroit-based automaker reported February sales of 270,423 vehicles, down 13% from February 2007.

General Motors's 2008 first-quarter production forecast remains unchanged at 965,000 vehicles and its initial 2008 second-quarter production forecast is set at 1.08 million vehicles, down 62,000 units, or 5%, from second-quarter 2007 actuals.

Tropicana dips

Tropicana Entertainment's opco term loan was weaker on Monday as rumors floated around regarding a court ruling declaring the company to be in default under its 9 5/8% senior subordinated notes, which the company later clarified, according to traders.

The term loan was quoted by one trader at 96¾ bid, 97½ offered and by another trader at 96½ bid, 98 offered. By comparison, the term loan was previously quoted at 97½ bid, 98½ offered.

"It traded in that context (96¾ to 971/2) this a.m. and then went quiet," the first trader added.

Last month, the company received a notice of default and acceleration on its 9 5/8% notes as a result of the New Jersey Casino Control Commission's refusal to renew Tropicana's license to operate the Tropicana Casino and Resort in Atlantic City.

A complaint by bondholders was filed in the Court of Chancery of the State of Delaware against the company, Tropicana Finance Corp., Aztar Corp. and some Tropicana officers alleging that an event of default has occurred as a result of the license refusal.

Tropicana believed that no default had occurred and the acceleration was, therefore, invalid.

According to the company, on Friday, the court rejected all but one of the contentions of the bondholders, therefore invalidating the acceleration of the notes and establishing that there is no current event of default.

The one item that was ruled in favor of bondholders relates to the transfer of title to the assets of Adamar, which the court found to have occurred on Dec. 19, 2007. This point of contention would only be an event of default if it continues for 60 days after receipt of written notice from bondholders. The first notice from bondholders is dated Jan. 28 and the second notice is dated Feb. 20 - meaning the 60-day cure period for any technical non-compliance has not expired, therefore no event of default presently exists, the company explained in an 8-K filed with the Securities and Exchange Commission.

A forbearance agreement from senior credit facility lenders regarding the Atlantic City license issue was obtained back in December.

The Atlantic City property is up for sale, with proceeds expected to be used to repay bank debt.

Tropicana Entertainment is a Fort Mitchell, Ky.-based gaming entertainment provider.

West price talk

Moving to the primary, price talk on West's $130 million term loan surfaced now that timing on the deal has been nailed down, with the launch scheduled to take place this Wednesday, according to a market source.

The term loan is talked at Libor plus 500 bps, with a 3.5% Libor floor. The paper will be offered to investors at an original issue discount of 97. It carries hard call protection of 105 in year one and 102 in year two, the source said.

Wachovia is the lead bank on the deal that will be used to help fund the acquisition of Genesys SA for €2.50 per ordinary share and for the American Depositary Shares at the dollar equivalent.

The total transaction value, excluding transaction expenses, is about €182.9 million.

The company's existing term loan will not be changed in connection with this deal.

West is an Omaha, Neb.-based provider of outsourced communication services. Genesys is a France-based multimedia collaboration service provider.

Randall-Reilly closes

Randall-Reilly Publishing Co. LLC closed on its $94 million credit facility, according to a market source.

The facility consists of a $10 million revolver and an $84 million term loan, with both tranches priced at Libor plus 550 bps.

During syndication, the revolver was downsized from $15 million, pricing on the two tranches was increased from Libor plus 450 bps and call protection was added to the term loan.

GE Capital Markets and CIT Capital Securities acted as the co-lead arrangers on the deal that was done in a "club" style, with GE the administrative agent.

Proceeds were used to help fund Investcorp's acquisition of the company from Wachovia Capital Partners and members of management.

Randall-Reilly is a Tuscaloosa, Ala.-based media and information company focused on the trucking and construction markets.

Dayton closes

Dayton Superior Corp. closed on its $250 million credit facility, consisting of a $150 million asset-based revolver priced at Libor plus 225 bps, with a 37.5 bps undrawn fee, and a $100 million six-year term loan (B1/BB-) priced at Libor plus 450 bps, with a 3.25% Libor floor, and an original issue discount of 98.

During syndication, pricing on the term loan firmed up at the high end of original guidance of Libor plus 425 bps to 450 bps.

Financial covenants include a maximum leverage ratio and a minimum interest coverage ratio.

GE Capital acted as the lead bank on the deal that was used to refinance the company's existing $130 million revolver and retire its 10¾% senior second secured notes due in September 2008.

Drawdowns against the new revolver are expected to be about $89 million, including $10 million for the pre-funding of accrued interest through April 2.

Dayton Superior is a Dayton, Ohio-based provider of specialized products for the non-residential concrete construction market.

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